The Aquino administration is forming an inter-agency group that shall specifically address increasing cases of oil smuggling that not only deprive the government of revenues but has likewise been triggering unfair competition in the deregulated oil industry.

“I met with the President and we have in that discussion the formation of interagency group that will specifically address oil smuggling,” Energy Secretary Rene D. Almendras disclosed.

Initially, the composition thought out for the body would include the Department of Energy, Department of Finance and Department of Justice.

“From VAT alone, we have been losing P10 billion a year from oil smuggling. And from what we have known, the syndicates are very well-entrenched,” the energy chief noted.

Almendras laid down that policy statement following a query from Cebu stakeholders why consumers in the area have been paying P5.00 per liter more on their fuel consumption.

Apart from supply-demand dynamics and the pricing structure, the energy secretary emphasized that oil smuggling could be a factor why pump prices are deflated in some areas; while true costs are reflected in other jurisdictions.

Absent a strong policy versus inexorable cases of oil smuggling, it has been noted that the government will always end up the ‘‘big loser’’ because this could mean P32 billion worth of foregone revenues on its coffers on a yearly basis.

“Truly, I wish I can simplify the solution to oil smuggling, but sorry I cannot. All I can tell you right now is, we will try our very best to stop smuggling,” Almendras stressed.

The timeframe as to when harmonization to variations on oil pricing across regions be drawn, the energy chief pointed out that “the industry has yet to see the real interplay of supply and demand.”

Smuggling, he qualified, is just one part of the equation; stressing that pricing structures and cost of logistics shall also be factored in assessing the final price being reflected at the pumps.

Previous reports with the Bureau of Customs (BoC) reveal some facts on despicable oil smuggling acts. Cases could come in the form of undervaluation, misdeclaration of product importations’ volume or non-payment of duties and taxes.

Oil smuggling can also be done in a number of ways, ranging from: the use of small oil tankers of fishing boats to load oil products from a mother ship stationed in international waters; declaration of oil products as aromatic hydrocarbons or catalysts to avoid payment of rightful customs and duties; companies declaring a lower value for their imported oil to avoid payment of additional duties and taxes; the declared volume of oil products in the import entry is much lower than the actual imported volume; and oil products destined for tax-exempt entities being diverted to gas station dealers.

The BoC previously proposed to Congress several measures on how the government could pin down oil smugglers – among them would be the need to strengthen anti-smuggling provisions of the Tariff and Customs Code.

The propounded policies shall include: Timely and periodic publication of established values of petroleum product to prevent undervaluation; implementation of the fuel marking for tax and duty free imported kerosene and fuel oils to prevent unauthorized diversion into the domestic market; and accreditation of bulk and break bulk cargo surveyors to ensure accurate reports and accountability in the importation of petroleum products.